With rising numbers of passengers, traffic capacities and sales revenues over the last 35 years, the Low-Cost Airline business is a very successful concept for short and medium flights.

Would this Business concept work also for long haul flights? Low budget for long-haul flights is actually not a new idea, but the realization had many failed attempts.

First low-budget transatlantic flights commenced in the 1970s

The first “no-frill” flight was realized in the late seventies by Sir Freddie Laker with his “Skytrain”, a McDonnell Douglas DC10, scheduled between London Gatewick to New York. Although the attempt failed in 1983 mainly because of high operating costs, the attraction of this business has not lost its shine till today

Norwegian Air Shuttle and AirAsia X currently taking the challenge up again and fly long-distance flights across the Atlantic and Southeast Asia. The key question is, can the present Low-Cost Concept work over long haul sectors, and will they be more successful than their predecessors this time?

The main concept of Low-Cost model focuses on business and operational practices that drive down costs, includes operating at secondary airports, flying a single airplane type, increasing airplane utilization, relying on direct marketing and sales, single class concept, no frequent-flyer programs, and keeping manpower costs low.

Common Low-Cost Carrier Business Indicators

• A single class concept
• A single type of aircraft (commonly A320 , B737 families), reducing training and servicing costs
• A minimum set of optional equipment on the aircraft, further reducing costs of acquisition, maintenance and weight
• A simple fare scheme, such as charging one-way tickets half that of round-trips
• Flying to cheaper, less congested secondary airports
• Fast turnaround times
• Unreserved seating
• Simplified routes, point-to-point
• Luggage is not automatically transferred from one flight to another
• Generation of ancillary revenue from a variety of activities, such as à la carte features and commission-based products
• Direct sales of tickets, especially over the Internet
• Employees working in multiple roles
• A disinclination to handle Special Service passengers
• Fuel hedging programs
• Passengers paying charges for extras, such as hold luggage, online check in and priority boarding
• Avoiding using jetways
• Not supplying meals in a flight, but offering snacks, sandwiches and drinks instead to purchase on board
• No refunds or transfers to later flights in the event of missed flights

Comparing to Network Airlines, Low-Cost Carrier reduced in average unit cost by 35 percent to 45 percent, mainly by focusing cost cutting on those cost sectors, which are directly under their influence.

The two charts above show the distribution of total operating expenses by low-cost carriers and network airlines. The highest costs for Low-Cost Carrier are lying there, which they cannot control or take direct influence on.

The charts below demonstrate the different cost distribution by Network Airline and Low Cost Carrier

The Table below list the main operating cost factors that can be influenced by an airline:


The feasibility of Low-Cost for long-haul Sectors will depend mainly on the ability of the Airlines to control the operating expenses.

Adapting Low-Cost concept for potential cost savings

The current Low-Cost Concept has proven to be a very successful business, can it be applied for long-haul sector?

The potential savings can be located mainly in:

  1. Productivity: e.g. Aircraft type,Load factors,Fuel Consumption, Manpower
  2. Performance: e.g.Passengers traffic, Punctuality , Aircraft Utilization
  3. Operational: e.g. Airports, Air Traffic Management, Handling, Routes, Destinations

Increasing Load Factors and Seat Densities

Most gains will come from high seat densities. A comparison to European Network Airlines shows that they have also high Passenger Load factors and dense Eco cabins, here in average – (source: AirlineProfiler)

  • Transatlantic Routes, average

  • Europe to Asia, average

  • Within Europe, average Network

  • Within Europe, average Regional

  • Average Load Factor Worldwide, all Ranges


The tables below shows seat pitch, width and utilization of flight cabin by Network Airlines and Low Cost Carrier:

High Passenger Load Factors and dense Seat-Configurations on long haul sectors is already implemented, and will continue. The Eco-Seating or Single Class Concept (especially for domestic or regional routes) is increasing, business class seating is reduced and expanded by Premium Economy. The First Class Concept is strongly reduced and many airlines re-considering the concept or even cancel the service completely. This factor will not provide Low Cost Carriers a clear and present advantageous comparing to Network Airlines.

Airframe-, Aerodynamic improvements, reducing fuel consumption

Cost reduction through utilization of aerodynamic improved airframes and more economical engines, can provide a large contribution to cost reduction.

The Graphic below should illustrate the potential fuel savings predicted by Airframe- and Engine-Manufacturer (short and long term are disregarded).

Fuel represents approximately 50 percent of the total trip cost, for every carried tonne of fuel , 0,5 tonnes of fuel will be burnt to carry it. The Airframe- and Engine-Manufacturer predict for the short term Fuel burn savings of 2 percent to 4 percent, with new technologies in the long term, estimated fuel burn savings are predicted to be in the region of 10 percent to 12 percent.

Common twin Engine Jets used by current Low Cost Long Haul Operators, comparing Engine type and Fuel consumption:

The Boeing B787 is very fuel efficient airplane, therefore it is very likely that the Low-Cost Carrier will prefer to operate with this type of aircraft or similar (e.g. Airbus 350, Airbus A330 Neo, revamped B737 or A320 with extended range).



But to launch an attack on the long haul market, the Low-Cost Airline needs an adequate number of aircraft to be able to serve the required destinations with sufficient frequencies.

Boeing and Airbus are working flat out and have a long waiting list: within the next 8 years, the delivery of 657 Boeing B787 and 456 Airbus A350 is planned.
Also in planning are the revamped versions of narrow body aircraft like Boeing B737 and Airbus A320 as extended range versions, capable to cross the Atlantic, facing the same problem of a  long production line.

In summary, for long-haul flights the aircraft efficiency and a lean airline fleet will play an important role, but due to the long aircraft production periods it will take years for a Low Cost Airline to build up an adequate fleet. This time span will be used also by the Network Airlines to upgrade their airplanes, convert fleets and modify business concepts.

Passenger traffic, Punctuality and Aircraft Utilization

Punctuality and high aircraft utilization are a key factor to run a robust operation and to create a cost-effective business. On the short- and medium-haul, Low-Cost Carrier made it to their strongest feature.

On long Haul sectors, network carriers already achieving a significant performance, in average 13-15 hours aircraft utilization and over 80 percent punctual flights. The possibilities increasing flight rotations are exhausted, because long haul flights needs longer turn around times for boarding, Loading, servicing and fueling. Longer flying hours can violate crew duty time regulations and run up against time zones and airport curfews.

Flying to less congested secondary airports will not be so easy, because the necessary infrastructure such as runway length, fire brigades categories, maintenance facilities, certified handling agents, handling support and the necessary ground support equipment could be not available.
To operate on primary international airports will not gain any savings, exactly the contrary, monopoly like status means higher fees, lower crew utilization, additional overnight costs will increase expenses and reduce crew productivity.

In summary, high performance with low operational expenses can hardly be combined, the Low-Cost Carrier will presumably face the same expenses as the incumbent airlines, because this costs are beyond their influential range or unavoidable.

Generating new traffic or diversion from other transportation mode

As outlined above, high passenger load factors (>82%) are essential for long haul operations, the question raises now is how will the Low-Cost Airlines manage to achieve this high load factors.

With the low fares concept, it was assumed that the Low-Cost Carriers stimulated new traffic in addition to network and charter airlines. According to our previous Low-Cost Market Study, we assume that the Low Cost Concept did not generate new passenger traffic but more by taking market shares from incumbent airlines, in particular the displacement of the regional carrier and charter airlines.

Generating more air traffic by diversion from other transportation mode is a possible option for domestic and regional flights, but not for international long haul destinations (e.g.transatlantic flights).

The Low-Cost Carriers must therefore gain market shares directly from the network airlines, because they have no evasive options.

Attacking the last stronghold of network airlines

The Low-Cost Carrier will focus destinations with the strongest traffic. The illustrations and chart below show the potential areas in which very probably the preferred destinations will be located.

      • Passenger traffic, by countries
      • Gross domestic product (GDP), by countries
      • Distribution of top destinations (2014)
      • Probable Low Cost Carrier Long Haul Operating Areas and Destinations
      • Destinations within 8 hours flight time

Top destinations, by flight movements per year (2014)

Chicago 881.933
Atlanta 868.359
Dallas 679.820
Los Angeles 616.498
Beijing 581.950
Denver 570.614
Charlotte 545.178
Houston 496.187
London LHR 470.710
Frankfurt 469.026
Las Vegas 467.946
Paris 465.240
Amsterdam 438.296
San Francisco 431.633
Istanbul 422.174
Minneapolis 412.695
Mexico City 409.954
Miami 399.048
Phoenix 393.165
Hong Kong 390.795
New York JFK 387.076
Munich 376.678
Toronto 364.835
Boston 363.797
New York EWR 361.398
Dubai 357.339
Madrid 342.601
Singapore 341.386
Seattle 340.478
Sydney 327.554
Rome 312.118
Sao Paulo 304.586
Orlando 290.331
Incheon 290.043
Bangkok 289.568
Barcelona 283.850
Moscow 277.785
London LGW 254.543
Tokyo 229.581
Taipei 208.874

source: Airports Council International

Top destinations, by passengers traffic per year (2014)

Atlanta 96.178.899
Beijing 86.128.000
London LHR 73.371.106
Los Angeles 70.662.212
Dubai 70.475.636
Chicago 70.075.204
Paris 63.813.756
Dallas 63.522.823
Hong Kong 63.368.000
Frankfurt 59.571.802
Istanbul 56.954.790
Amsterdam 54.978.023
Singapore 54.093.070
Denver 53.472.514
New York JFK 48.811.289
San Francisco 47.155.100
Bangkok 46.423.352
Incheon 45.512.099
Charlotte 44.279.504
Las Vegas 42.869.517
Madrid 41.833.374
Houston 41.251.015
Miami 40.941.879
Munich 39.716.877
Sao Paulo 39.537.000
Rome 38.623.400
Sydney 38.496.000
Phoenix 38.380.745
London LGW 38.094.885
Barcelona 37.559.044
Seattle 37.497.941
Orlando 35.714.786
Tokyo 35.594.965
Minneapolis 35.152.460
Mexico City 34.255.739
Taipei 34.140.634
Moscow 33.039.531
Toronto 32.616.793
New York EWR 32.464.773
Boston 31.634.445

source: Airports Council International

Passenger traffic, by countries, source: AirlineProfiler

Gross domestic product (GDP), by countries, in USD, source: World Bank Group

Distribution of top destinations, source: AirlineProfiler, Routes- Network Module

The Low Cost traffic will take place mainly between North America and Europe. Probably between Southeast Asia and Europe it will start again, attempts in the past failed (Oasis Hong Kong Airlines ).

Probable Low Cost Carrier Long Haul Operating Areas and Destinations
Destinations within 8 hours flight time, between Europe-North Atlantic, Asia-Asia and Asia-Europe

Europe_flight_distances_web ASia_flight_distances_web


At the time, it is assumed that the optimal flight duration should not exceed 6 – 7 hours.
Apparently, Jetblue, Air Asia and Scoot are flying up to 6.5 hours, but it seems to be more an exception. As the illustration above shows, the average flight time between the probable destinations is above 8 hours. In the mean time, Norwegian already operates longer and established a foothold in the transatlantic market, because they have a fleet of seven brand B787 and manage to keep the airplanes 17-18 hours per day in the air.

Flight Safety Aspects

Flight safety is a continuous process of production, which means sufficient financial resources must always be available.
The EU regulation 1008/2008 sets the relation between sufficient financial resources and aviation safety. Lack of profitability have consequences, the aviation authorities have to intervene in order to prevent possible negative effects on air safety.
At present, the Low Cost Carrier have an excellent flight safety statistics and operate under a high safety standard level.
The implementation of the long-range concept will expose the airlines under tremendous competitive pressure, cost savings are then top priority.
The Accident of Indonesia AirAsia Flight 8501 has reignited a discussion about the safety of Low Cost carrier, especially after the regulatory licenses for the Surabaya-Singapore route as well as Medan-Palembang route have been suspended since January 2015 due to suspected licensing breaches.


A direct implementation of the current LCC concept on long-haul sectors is ineffective. All operational advantages of the short- and medium- haul sectors and resulting cost savings remain without the desired results.

Estimated cost savings potential, if current Low Cost Concept will adapted for Long-Haul Sectors

Aircraft type, Load factors, Fuel, Manpower
Passenger traffic, Aircraft Utilization
Airports, Navigation, Handling, Network

To gain market shares on the expense of the incumbent airlines will be very difficult and will not remain without countermeasures.
The only possibility to get a foothold in to the market will be very low air fares , but on the long term it cannot be maintained, as long-haul flights are very expensive operations.

Overall, the present concept for long haul low cost airlines seems not having any differentiation in the next years from the incumbent airlines, mainly because of the specificities of the long-distance operations.

A new concept is necessary, which take into account the specificities of the long-distance operations, combining emerging aviation technologies and information technology, demand and supply –driven, flexible networks and aircraft management, focused on customer comfort service providing a mix of premium and comfort classes.

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